Richard Trumka, president of the AFL-CIO, speaks during a Senate hearing in Washington, D.C., on Feb. 12, 2014. (Andrew Harrer/Bloomberg)

Bloomberg News

Organized labor wasted no time responding to a Congressional Budget Office report that undermines one of unions’ top priorities: raising the federal minimum wage, along with wages in general.

Tuesday’s report from the nonpartisan CBO said raising the minimum wage to $10.10 an hour would lift 900,000 Americans out of poverty, but would cost the U.S. economy about 500,000 jobs — mostly low-wage ones — by late 2016. The estimate comes as unions are pushing a Democratic-sponsored proposal in Congress to boost the wage in stages from the current $7.25 an hour to $10.10 by mid-2016. After 2016, the wage would adjust annually for inflation.

Richard Trumka, president of union federation AFL-CIO, which is holding its winter meeting in Houston this week to strategize for the year, immediately challenged the study’s findings and said it echoed false claims by conservatives.

“Every time momentum builds for lifting wages, conservative ideologues say it will cost jobs. Every time, they’ve been dead wrong,” Mr. Trumka said in a statement emailed during his closed-door meeting with labor leaders in a Hilton hotel ballroom.

“This is more of the same noise,” Mr. Trumka said, adding that conservative economists don’t care about workers. “Our country is finally poised to lift millions out of poverty and make our country work for the people who work. Let’s raise the wage and we’ll prove the CBO wrong again,” he added.

At the start of winter conference on Monday, Mr. Trumka said one goal of the meeting was to find “strategies to tackle income inequality and incubate new forms of organizing” to help boost pay.

The CBO said that actual job losses could be smaller or larger than the 500,000 it projects. It said there is about a two-thirds chance that the effect of the raise would be in a range between “a very slight reduction” in employment and a reduction of one million jobs.

Right-leaning politicians and researchers said the report’s forecast of job losses was accurate.

“The CBO has confirmed what the vast majority of careful, peer-reviewed economic research has also shown: Raising the minimum wage will reduce job opportunities for the least-skilled, at a time when unemployment for young adults has been above 20% for more than five years,” said Michael Saltsman, research director at the right-leaning Employment Policies Institute.

The report “should come as a warning to President Obama and allied legislators who are pushing for an increase to $10.10,” Mr. Saltsman said, adding that the CBO’s estimate of lost jobs is broadly consistent with his organization’s earlier estimates of at least 360,000 job losses and as many as one million.

He suggested that Mr. Obama and other proponents of a higher minimum wage should focus on policies that help create jobs, not “barriers to entry-level employment.”

“This CBO report reiterates a fundamental principle of our free-market economy: Increasing the minimum wage eliminates jobs, cuts off the bottom rung of the economic ladder, and reduces opportunity,” he said in a statement.

Labor Committee Chairman Tom Harkin (D., Iowa), one of the authors of the bill to raise the minimum wage to $10.10, defended the legislation.

“Since the first minimum wage was enacted more than 75 years ago, opponents have argued that a wage floor would cause job loss. But this is a myth,” said Mr. Harkin, adding that hundreds of experts back that finding. “More than 600 economists, including seven Nobel Prize laureates, recently affirmed the growing consensus that low-wage workers benefit from modest increases in the minimum wage without negative consequences for the low-wage job market.”

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